The decision to file bankruptcy is not one to be taken lightly. It’s typically risk management and small business a last resort option that is used after trying other debt relief solutions. Bankruptcy can ruin credit, make it difficult to access loans, and cause the loss of valuable items. It can also impact future financial goals, such as buying cars or homes or obtaining a job, as well as getting insurance. Financial advisors recommend looking into other debt relief options prior to bankruptcy.

Chapter 7 bankruptcy involves liquidating assets in order to pay creditors. The good news is that a majority of people are able to keep their most important possessions, such as their home or valuable vehicle. Additionally any court action in relation to unpaid bills will likely be stopped when a person is declared bankrupt.

In general, those who earn regular incomes can choose to apply for Chapter 13 to create a plan to pay off their debts over three to five years. It’s good to know that creditors can’t close on your home, repossess your property, or garnish your earnings during this time.

Loan servicers that use a customizable and comprehensive bankruptcy processing solution like Best Case by Stretto can automate bankruptcy notifications, track changes to account data and enhance communication with attorneys. This powerful tool searches vast nationwide bankruptcy databases to automatically discover and notify clients of changes, helping them minimize risk and avoid unnecessary operational costs.